Employee receives offer letter.
From job title and description to information regarding salary and benefits, there are several details to include when drafting an offer letter to a potential employee. — Hispanolistic / Getty Images

A job offer letter is a formal document written for candidates who are chosen for employment. It acts as proof of an offer with details about the position, including job description, salary, benefits and more. The letter can also act as a starting point for employment negotiations. This is an important step in the hiring process, and if they accept the job, you'll want to keep your employee's offer letter on file for future reference.

If the candidate agrees to the terms on the letter, they’ll sign the document and return it to you, starting their employment. It should be noted that an offer letter is not always a legal document. Employees will typically also sign a legally binding contract or employment agreement that gives legal protection for both parties.

[Read: 8 Top Recruiting Tools for Hiring Managers]

What is included in a job offer letter?

To give your potential employee clarity, a standard offer letter should contain the following pieces of information written clearly and plainly stated. Here’s a list of what’s included in a standard offer letter:

  • Job description: Plainly state the classification of the job and a description of what their day to day procedures and workflow will be like.
  • Job title: State the title for the job you’re offering so the employee knows how to refer to themselves formally.
  • Reporting structure: Let the employee know what their workflow will be, who their direct supervisors will be and how they’ll work within this system.
  • Starting date: Set an exact date and start time for when you expect the employee’s first day to be.
  • Work schedule: While schedules can change and be fluid, give an expectation for how many hours a day your employee is expected to work and in what time frame.
  • Salary: Perhaps most importantly, tell the employee what their starting salary will be and what types of commission and bonus eligibility there may be. Mention how frequently they’ll be paid, payment methods and if it’s on an hourly or salary basis. Be sure to also mention if your company offers any type of stipends or mileage reimbursements.
  • Benefits information and eligibility: Clearly state what benefits your company offers including health insurance, a 401(k) plan and work-from-home options.

[Read: Small Business Employee Benefits: Everything You Need to Know]

Write the letter in the tone of your company, which can be either formal or casual depending on your team's culture.

  • Paid time off: Explain how many PTO days your employee has and when they’re eligible to use them. Most companies require an employee to work at a job for a minimum of 60 to 90 days before they can use their PTO days.
  • Privacy policies: Companies will often have their employees sign a non-disclosure agreement so that they cannot publicly discuss the inner workings of the company and the industry they work for. While the employee’s signing of the offer letter is not an NDA itself, it does set a tone and expectation by mentioning your privacy policies in the letter itself.
  • Termination conditions: In clear language, state the terms and conditions for what it would take to be terminated from their position. You never want to imagine firing an employee but by starting a paper trail early, you’ll have more evidence should you ever need to use it.
  • Acknowledgement of offer/confirmation of acceptance: When concluding your offer, you can decide if you want to put an expiration date for acceptance of the letter and give them a deadline. At the very least, tell the employee the means of how they can confirm they received the letter and how they can respond to it.

[Read: Automate Your Hiring Process to Focus on Finding the Best Hires]

How to write a job offer letter

There are a few formatting guidelines you should follow when drafting an employee offer letter. Include your company’s logo in your letterhead, as this gives it a professional presentation and legitimation. Write the letter in the tone of your company’s culture. This can be either formal or casual, so long as it reflects your work environment. Make sure all the details, contact and address information are correct on the letter so they can contact you as soon as possible. By including all these details you’ll be able to start sending out offer letters to your employees in no time.

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